Canadian Heritage Committee on Feb. 14th, 2017

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you very much, Madam Chair.

Thank you for coming to testify before the committee once again.

My colleagues have asked some good questions. Mr. Waugh asked about competition. Let us look back 10 years, although not much has changed since then. If Leon's furniture had wanted to buy the Brick, I imagine you would have stepped in because that is something that can affect the market, suppliers, and customers.

On the other hand, since Facebook and Google do not have branches or stores in Canada, do not have accounts, do not sell advertising in Canada, do not have salespeople competing to attract clients and so forth, you cannot step in. Is that correct?

[Julien Brazeau]

We will certainly look at the impact on competition.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

But there is none in their case.

[Julien Brazeau]

The Competition Act applies to all organizations that have activities in Canada. As long as Facebook, Google or any other organization has activities in Canada or has an impact on competition in a market, we will certainly look into it.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Have you thought of looking into it?

[Julien Brazeau]

As to Postmedia/Sun Media, I would have to look at the file. We have certainly looked into certain digital products. As part of that analysis, we determined that the products complemented each other rather than competed with each other.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

That was three years ago, but the sales figures have increased considerably since then.

Did you say that Industry Canada is the department responsible for your office?

[Julien Brazeau]

Yes, it is Innovation, Science and Economic Development Canada.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

That is incredible. Once again, they have been asleep at the switch for the past six or seven years. They said it was a matter for Canadian Heritage and did nothing for this industry as it faced challenges and a dangerous degree of concentration.

How many people at the Competition Bureau work on these files?

[Julien Brazeau]

We have roughly 400 employees, at three regional branches.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Of course you work on a wide range of subjects. I could cut you some slack since everyone is surprised by the vulnerability of our regional media and local production. Organizations that provide over-the-top services have set up shop here and now it is the law of the jungle. Everyone has been caught off guard. Let me say, however, that the Competition Bureau should be on high alert.

Perhaps you need to develop new areas of expertise. What you are looking at is a far cry from the stamping of steel girders by Dominion Steel and U.S. Steel. This is quite different. Metal is very important, but the democratic voices that are expressed through the news media are crucial.

Not to be disagreeable, but you just have to look at the front page of the Ottawa Sun, with the headline “Fatal distraction”. The front page of the Ottawa Citizen has the exact same headline, in the same type, as does the front page of the National Post. If you go into a smoke shop in Ottawa, you see three different newspapers with the same front page. How can someone say then that they prefer the National Post? It is not possible.

We heard Mr. Godfrey say that the print media are in danger. It is true, but then he received a $2.3 million bonus. I think that would be enough to keep a newsroom going for a long time, and employ a lot of people. It is hard to figure out.

What would you like to have? What could we do? For our part, we have to find solutions.

You maintain that Google and Facebook have monopolies right now. Do you know if anyone at all has raised that issue as regards Google and Facebook? They can lead people as they wish, since they are alone in their respective niches.

Moreover, what could we do to revitalize you or, alternately, to create a separate entity?

[Julien Brazeau]

First, I will briefly answer your first question, and afterwards I will ask Mr. Durocher to add his comments. Then we can answer the second question.

As for the authorities in the world who have studied the issue of Google's apparent monopoly on information, many countries have looked at Google's situation in the United States and the European Union. The Competition Bureau did examine the allegation of non-competitive behaviour by Google due to its dominant position in the market. That study is now complete.

I'm going to yield the floor to my colleague so that he can speak to you about it, and then I will answer your second question.

[Anthony Durocher]

We conducted an in-depth study on Google's business practices in Canada, especially as regards allegations of its abuse of its dominant position. This was an in-depth examination over several years. We published our results about a year ago, in April 2016; we took this very seriously. As you know, for many people and companies, Google is a platform to access the digital economy here in Canada. So this was a very thorough examination.

When we receive complaints about activities in the market, it always comes down to proof. Our mandate is to conduct investigations and bring files before the Competition Tribunal to see if there is cause for legal proceedings. In fact, we have to have proof, witnesses and documents to support a file. That is what you need in cases like Google's.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

And yet Mr. Godfrey had said that he was going to maintain distinct press rooms for those three newspapers, and so he lied to you. Are you not in a position to intervene?

As for the concentration of media, I am the first to say that it may be preferable for these three newspapers to merge. They are like three collapsing walls that are holding each other up in the face of digital media. The fact remains, however, that this whole affair is based on the illusion of a variety of viewpoints.

Did he lie to you, yes or no? Why did you not act?

[Julien Brazeau]

As I said briefly in my remarks, information on the two distinct press rooms was information the parties provided to us, but that was not the basis for the bureau's analysis.

The decision that followed, that is to say merging the two press rooms, had repercussions on employment, which effect was obviously regrettable for those who lost their jobs. However, since this factor was not included in the predetermined list to be considered by the bureau, there was no case for reopening the file.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Aside from the job loss, there is also an impact on the variety of points of view on information. Was that one of your analytical criteria?

[Julien Brazeau]

Who is in the best position to speak out on the issue of information diversity? It is not a criterion we usually study. Our analysis is really based on the economic aspect, and market efficiency.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

So this issue must be submitted to another body, perhaps the CRTC, even though we are talking about the written press.

[Julien Brazeau]

I cannot say who would have that responsibility. I will leave it up to you, as parliamentarians, to decide.

However, I can confirm that for broadcasting and television broadcasting, even though the bureau studies transactions from the angle of economic concentration, the CRTC then examines more general matters of public interest.

The same thing applies in the area of transport. The Minister of Transport may review a transaction the bureau has studied in order to make decisions on more general issues of public interest. In addition, the Minister of Finance can do the same thing with regard to matters involving banks.

As I said, our analytical approach is really based on the market's economic efficiency. Our specialty is the study of quantifiable effects. As for deciding whether we are in the best position to—

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Clearly, you are not the ones.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Nantel. I think you've gone well over your time on that question.

Now, I go to Mr. Samson for the Liberals.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

Thank you for being here, and for your comments.

I'll be honest with you, I am perplexed. In the bureau's description, it says that the organization is independent, and I quote:

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

For years and years, books have been written on the importance of competition, and yet here we are ranking first for our low level of competition.

Our country is enormous; it includes rural regions, diversity, minorities and new developments, but these are not criteria to be considered. Saying that the only question to be considered is the economic one constitutes a problem, I think.

I don't know about you, but I was saying to my colleague that we were elected to make changes and come up with recommendations to improve things. So, what happened over the past 50 years? No one else talked about it? These criteria that are important in Canadian society were always there and things have not changed that much. I find this quite problematical.

I would like to know what criteria and best practices the other countries use, as opposed to us, to ensure competition and not find themselves at the top of the list, but rather in 17th or 21st place among the list of countries with low levels of competition. Help me to understand.

[Anthony Durocher]

Without doing a full international benchmarking exercise, I can tell you that we're generally familiar with how our foreign counterparts apply their competition laws and antitrust laws. Matters such as the issue at hand about diversity of voices typically would not fall in the realm of antitrust laws. Antitrust laws are generally an economic tool that really assesses rivalry between companies and how businesses and consumers benefit from that rivalry.

As my colleague tried to outline, we are largely focused on facts and evidence, rooted in how competition impacts price, innovation, and other non-price dimensions of competition and output. We would really have to focus on evidence of rivalry as it is, in a given industry. Diversity of voices and issues like that are not typically areas where you would necessarily see companies competing, or that would be taken into account in a competition analysis.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

How can Canadians benefit from a lack of competition?

[Anthony Durocher]

We at the Competition Bureau are the champions of competition, and we strongly believe in its advantages. I can tell you that at the bureau we believe very strongly in our mandate, and we do everything we can to ensure that Canada's industries are very competitive.

When we hear about issues concerning the market share of some industries, such as the media, what is important for us is the definition of a relevant market. Under our act, we have to look beyond market share. We also have to consider barriers to entry, and the evolution of markets. We use all possible means to obtain sufficient proof and take the necessary measures when we observe a lack of competition resulting from a transaction or a merger. As we mentioned previously, for us it boils down to the proof that has been gathered in a review.